Potential black swans impact on gold and silver?

[pmbug]

I think in the last few weeks, hedge funds have been selling gold and buying crypto. There is a decent chance that NVDA might blow up due to accounting fraud (like Enron) and Binance might get exposed for fraud similar to FTX. Should these events catalyze, I suspect crypto is going to drop as hedge funds raise cash to meet margin calls. Gold will likely catch some safe haven bids from investors too. Thoughts?

[Cu Penny Hoarder]

A surprise black swan would cause PMs to dump with the market. Sometime shortly after that they would go to the moon.

The eventual crypto crash is going to be devastating because so many are buying into this crap.

[68Camaro]

A surprise black swan would cause PMs to dump with the market. Sometime shortly after that they would go to the moon.

The eventual crypto crash is going to be devastating because so many are buying into this crap.

ETF gold would dump, but physical gold would be largely unavailable at those prices. (A limited opportunity to buy physical at a discount might be available if you act fast at the right time.) The ETFs would declare a force majuere event to remain afloat (if they could). After the immediate crash, yes, you're right, then PMs would go to the moon.

[shinnosuke]

If BTC drops there are countries, companies and individuals who have been regretting not taking a position in it previously so I’m not concerned about a loss of demand.

[Recyclersteve]

A surprise black swan would cause PMs to dump with the market. Sometime shortly after that they would go to the moon.

The eventual crypto crash is going to be devastating because so many are buying into this crap.

ETF gold would dump, but physical gold would be largely unavailable at those prices. (A limited opportunity to buy physical at a discount might be available if you act fast at the right time.) The ETFs would declare a force majuere event to remain afloat (if they could). After the immediate crash, yes, you're right, then PMs would go to the moon.

The ETF's (GLD and SLV) didn't declare a force majeure event in 2008 when Lehman Bros., Bear Stearns and others failed. It still kept trading.

[Recyclersteve]

A surprise black swan would cause PMs to dump with the market. Sometime shortly after that they would go to the moon.

The eventual crypto crash is going to be devastating because so many are buying into this crap.

Totally agree and the sad thing is that many are young people who are so into crypto that they aren't investing anything into blue chip stocks as a hedge. It will be truly sad when many give up after getting wiped out (or suffering major losses) and never try investing in the markets again.

My dad once took money that my brother and I had and bought a mutual fund called Manhattan Fund (run by a then famous guy named Gerald Tsai). To say it did poorly would be an understatement. I saw a ranking of the 10-year performance of 1,500 mutual funds and Manhattan Fund was ranked 1,494 of 1,500. As a result my dad totally gave up on the stock market. That was one of the reasons I wanted to become a stock broker and learn more about how to make money in the stock market.

[Recyclersteve]

If BTC drops there are countries, companies and individuals who have been regretting not taking a position in it previously so I’m not concerned about a loss of demand.

I'd be VERY concerned and the reason is that Bitcoin isn't like Apple or Walmart which make or sell real products. There is no product, profits, dividends, etc. It is merely going up partly because of hype and partly because the stock charts show it to be in an uptrend. When bitcoin falls below the 50-day moving average (currently $75,161.75) and the moving average itself goes from being in an uptrend to a downtrend, the pullback will likely be absolutely vicious. If bitcoin goes below the 200-day moving average (currently $66,635.06), some would say that could potentially be a final nail in the coffin.

Another thing that nobody talks about is this. Right now Tesla will accept bitcoins to pay for Teslas. What happens when the volatility (both up and down) gets so wild that vendors start refusing to accept bitcoins as payment for goods and services? I'd think that these and other things could cause aggressive hedge funds to put large sums of money into shorting bitcoin, that is, betting on it going down.

One fairly famous guy (Andrew Left) said he was bullish on bitcoin itself, but was shorting MicroStrategy (MSTR) because they use so much leverage to buy bitcoin. Two days before they made their announcement I shorted MSTR myself and made a modest profit. I am out of the trade right now.

[Recyclersteve]

Some comments on gold and silver and how they reacted to the last major Black Swan event (the financial collapse of 2008). I'd also like to see how they reacted to the tech stock bubble which burst in 2000 and caused a major down market in 2000-2002, but the GLD (gold) and SLV (silver) exchange traded funds weren't available for trade that far back. GLD didn't begin trading til ca. November, 2004 and SLV didn't begin til ca. April, 2006.

Let's look a bit more at GLD and SLV and how they reacted to the 2008 financial collapse. If you want to research the collapse of 2008, perhaps the 2 biggest names closely associated with it were Bear Stearns (then traded as BSC) and Lehman Brothers (then traded as LEH).

The GLD fund had the following prices:
2/08: $100.44
9/08: $66.00
5/09: $96.97
8/11: $185.85
Friday it closed at $245.59

The SLV fund had the following prices:
2/08: $20.73
9/08: $8.45
5/09: $15.78
3/11: $48.35
Friday it closed at $27.92

I just wanted to provide those numbers for some kind of idea as to how gold and silver would react to a Black Swan event. Almost everyone who knows anything about financial markets would definitely say that the 2008 financial market collapse was definitely a Black Swan event. Some could argue that COVID was also a Black Swan event, but it didn't come anywhere close to affecting the stock market like 2008. Not even close!

[pmbug]

Thanks RS, appreciate your comments. FWIW, there is a guy on X that is all over NVDA and SCMI's nuts on accounting irregularities (and has been for a long time):

https://x.com/DarioCpx

https://justdario.com/

There is a different person on X reporting on some smoke pertaining to TRON, Binance and now Bitfinex indicating that there might be some FTX style comingling of operating funds with customer money:

https://x.com/DesoGames

Binance: https://threadreaderapp.com/thread/1862 ... 34393.html
Bitfinex: https://x.com/DesoGames/status/1863407542677709131

[68Camaro]

There are different types and levels of "Black Swan" events. In fact, that we are even speculating about what might happen would suggest that these things cannot be Black Swans since they can be predicted. The general issues and after effects of 2008 were also not real Black Swans. They might have been, if left to take a normal path, but the TPTB stepped in to stop the hemorrhaging with back room deals that we still don't know the details of, but someone had to take the fall, and that included Lehman Bros.

I'm really talking about a market collapse that is of size and type that it is beyond the control of TPTB.

[pmbug]

Quibble with the semantics if you like, but the issues I identified do not seem to be common knowledge or "priced in" and will have a disorderly effect on markets should they blow up.

[68Camaro]

Quibble with the semantics if you like, but the issues I identified do not seem to be common knowledge or "priced in" and will have a disorderly effect on markets should they blow up.

I was really responding to RS, though I didn't quote his post.

[Cu Penny Hoarder]

If BTC drops there are countries, companies and individuals who have been regretting not taking a position in it previously so I’m not concerned about a loss of demand.

Trees do not grow to the sky. Blips may never go back to their true value (zero), but I can easily see another FTX type of crash coming, whatever the reason.

Bubbles, manias, hype, FOMO, etc. can get dragged out for long periods... much longer than any of us her could imagine, but it's never "different this time".

[shinnosuke]

If BTC drops there are countries, companies and individuals who have been regretting not taking a position in it previously so I’m not concerned about a loss of demand.

I'd be VERY concerned and the reason is that Bitcoin isn't like Apple or Walmart which make or sell real products. There is no product, profits, dividends, etc. It is merely going up partly because of hype and partly because the stock charts show it to be in an uptrend. When bitcoin falls below the 50-day moving average (currently $75,161.75) and the moving average itself goes from being in an uptrend to a downtrend, the pullback will likely be absolutely vicious. If bitcoin goes below the 200-day moving average (currently $66,635.06), some would say that could potentially be a final nail in the coffin.

Another thing that nobody talks about is this. Right now Tesla will accept bitcoins to pay for Teslas. What happens when the volatility (both up and down) gets so wild that vendors start refusing to accept bitcoins as payment for goods and services? I'd think that these and other things could cause aggressive hedge funds to put large sums of money into shorting bitcoin, that is, betting on it going down.

One fairly famous guy (Andrew Left) said he was bullish on bitcoin itself, but was shorting MicroStrategy (MSTR) because they use so much leverage to buy bitcoin. Two days before they made their announcement I shorted MSTR myself and made a modest profit. I am out of the trade right now.

Steve, no disrespect intended but you are the 100 millionth person to predict the failure of Bitcoin. If you’re right, I will definitely tip my hat to you. Will you acknowledge your own lack of understanding when Bitcoin is $200k?

[Cu Penny Hoarder]

If BTC drops there are countries, companies and individuals who have been regretting not taking a position in it previously so I’m not concerned about a loss of demand.

I'd be VERY concerned and the reason is that Bitcoin isn't like Apple or Walmart which make or sell real products. There is no product, profits, dividends, etc. It is merely going up partly because of hype and partly because the stock charts show it to be in an uptrend. When bitcoin falls below the 50-day moving average (currently $75,161.75) and the moving average itself goes from being in an uptrend to a downtrend, the pullback will likely be absolutely vicious. If bitcoin goes below the 200-day moving average (currently $66,635.06), some would say that could potentially be a final nail in the coffin.

Another thing that nobody talks about is this. Right now Tesla will accept bitcoins to pay for Teslas. What happens when the volatility (both up and down) gets so wild that vendors start refusing to accept bitcoins as payment for goods and services? I'd think that these and other things could cause aggressive hedge funds to put large sums of money into shorting bitcoin, that is, betting on it going down.

One fairly famous guy (Andrew Left) said he was bullish on bitcoin itself, but was shorting MicroStrategy (MSTR) because they use so much leverage to buy bitcoin. Two days before they made their announcement I shorted MSTR myself and made a modest profit. I am out of the trade right now.

Steve, no disrespect intended but you are the 100 millionth person to predict the failure of Bitcoin. If you’re right, I will definitely tip my hat to you. Will you acknowledge your own lack of understanding when Bitcoin is $200k?

And there's the obligatory blipcoin devotee reply: "But, but, but... YOU DON'T UNDERSTAND!"

[68Camaro]

I guess I don't understand the continual pumping. Once Trump got elected I didn't doubt it would hit 100k. I won't be shocked if it hits $200k. If the new administration itself starts actively cheerleading, it could go higher. A million? Possible. Does that mean it has any value? No. That means it can go to zero as fast as it went up, or faster. I remain unconvinced unless the government decides to peg it to something. If it does, then I will re-evaluate.